H.B. NO.














relating to renewable energy.





     SECTION 1.  The legislature finds that the creation of renewable energy within Hawaii provides significant financial, health, environmental, and workforce benefits to the State.  Yet although Hawaii has made impressive steps forward in developing renewable energy and lowering dependence on fossil fuels, barriers remain which leave the majority of island residents without the opportunity to personally choose renewable energy for their home and business use.

     Many property owners, such as those living in condominiums, or in shaded areas, and all of the forty per cent of state residents living in rental properties have no opportunity to install and benefit from renewable energy.  Further, studies indicate as many as seventy per cent of businesses lease their locations, making them ineligible to install renewable energy onsite to meet their needs.

     Local energy generation on a shared or community basis can significantly address those missed opportunities to reduce our reliance on important fossil fuels.  Hawaii has a diverse and deep pool of renewable resources ideally suited to these kinds of projects.  Further, the development of mid to larger sized renewable generation projects can be done in a manner that enhances the performance and integrity of our island grid networks.

     Shared renewable energy would create jobs, reduce emissions of greenhouse gases, and promote energy independence.  Further, shared renewable energy will enable schools, colleges, universities, local governments, businesses, and consumers to save money on their electricity bills, thereby helping to fund educational programs, spur investments, and strengthen our communities.

     Properly designed, shared renewable energy can also provide significant systemic benefits, such as avoided transmission and distribution upgrades, avoided line loss, and cleaner air and water while not shifting costs to non-participants, and should also allow electrical utilities to make a fair return on their investments, even if a customer chooses to participate.  Such a program would also allow Hawaii to take significant steps to meet its renewable portfolio standard goals, and do so without the need for additional public funds.

     There is widespread interest for the development of distributed generation facilities to serve the energy needs of many large institutional customers, including schools, colleges, universities, local governments, businesses, and the military.

     Public institutions need the flexibility and opportunity to participate in shared renewable energy facilities to generate electricity as provided in this Act.  Electricity usage is one of the most significant cost pressures facing public institutions at a time when they have been forced to cut essential programs.  Savings under this program could be used for restoring funds for essential services, staff salaries, facility maintenance, and other budgetary needs.

     Access to the fixed prices and potentially lower cost of renewable energy will also provide local businesses with the confidence they need to invest in our future expansion and growth.

     The purpose of this Act is to build on the success of the current net metering program by establishing a virtual net metering program to expand access to renewable energy resources to all ratepayers.  It is the intent of the legislature that this program be implemented in such a manner as to broaden access to self generation of renewable energy, while fairly compensating electrical corporations for the services they provide.  It is also the intent of the legislature that the public utilities commission minimizes the rate impact the program has on non-beneficiaries, with a goal of ratepayer indifference.

     SECTION 2.  Chapter 269, Hawaii Revised Statutes, is amended by adding four new sections to be appropriately designated and to read as follows:

     "§269-    Virtual net metering established.  The public utilities commission shall establish a virtual net metering pilot program of fifty megawatts alternating current rated capacity for renewable energy projects, proportionally allocated between utilities, and shall ensure capacity is allocated and developed to achieve the intent of this program no later than January 1, 2014.  Of the initial capacity, a minimum of twenty per cent shall be reserved to be built in low- to moderate-income areas, as the commission shall define, and a minimum of twenty per cent shall be set aside for residential subscribers.

     §269-    Bill credit calculation.  (a)  The commission shall establish a facility rate for each shared renewable energy facility by undertaking a comprehensive analysis of the costs and benefits associated with shared renewable energy generation to determine a rate for each facility participating in the virtual net metering pilot program, which shall be based on the full value that the shared renewable energy generation provides.  The commission shall adopt a methodology to calculate a facility rate for shared renewable energy generation that shall include the locational value and other systemic benefits of each facility no later than December 31, 2014.

     (b)  In order to ensure that this program becomes effective on January 1, 2014, an interim facility rate shall be set at the average retail rate per utility, as calculated based on their energy delivered in the previous year, less an appropriate amount to compensate the utilities for non-generation services provided.

     (c)  The facility rate shall be a price per kilowatt-hour of electricity and shall be determined as of the time of the application for an award of rated generating capacity for the shared renewable energy facility pursuant to the program that was subsequently granted.  Once established, a facility rate shall be applicable to that facility for the operational life of the facility.

     (d)  The commission shall publish such tariffs applicable to all participants per electrical utility as necessary, no later than ninety days following the enactment of Act      , Session Laws of Hawaii 2013, including a definition of what portions of a customer's bill may be offset by participation in this program.

     (e)  Any subsequent facility or subsequent expansion of a facility placed in service on or after the initial award of rated generating capacity that results in an increase in the facility's capacity to produce electricity shall be subject to the facility rate in effect on the date the participant organization applied for an award of rated generating capacity for the subsequent facility or increase in the facility's capacity.

     §269-    Bill credit revisions.  (a)  The commission may revise the bill credit mechanism at any time that it concludes that the existing mechanism does not provide program participants with the fair value of electricity and other benefits produced by the shared renewable energy facility or overvalues the benefits to nonparticipating customers of the electrical corporation for the electricity generated by a shared renewable energy facility.  Any revision to the methodology for calculating the facility rate shall apply only to rated generating capacity made available after the commission adopts a new bill credit methodology.

     (b)  For a shared renewable energy facility that has an established facility value for the bill credit, that value may be replaced by a replacement methodology determined by the commission; provided that the following occur:

     (1)  The commission determines that the replacement methodology provides a more accurate measure of the value of the generation provided by the shared renewable energy facility; and

     (2)  The replacement methodology results in a greater bill credit to the participant.

     (c)  Any renewable energy credits associated with an interest in a facility under this program shall be retired on behalf of the participant or transferred to the western renewable energy generation information system account of that participant, for the purpose of demonstrating the purchase of renewable energy.  Those renewable energy credits shall not be sold, transferred, or otherwise monetized by a party for any purpose.

     (d)  For energy that is unallocated to a benefiting account during the previous billing period, the recipient electrical corporation shall pay the participant organization the current wholesale rate plus the renewable energy credit value and receive any renewable energy credits associated with that energy.

     (e)  A shared renewable energy facility may be built, owned, or operated by a third party under contract with a participant organization.

     (f)  The electrical corporation shall ensure that no single entity or its affiliates or subsidiaries are awarded more than twenty per cent of any single calendar year's total cumulative rated generating capacity made available pursuant to subsection (g).

     (g)  Once the initial capacity has been awarded for shared renewable energy facility projects, the commission shall evaluate the functioning of the program.  By January 1, 2015, the commission shall conclude an evaluation of the program as of that date, to determine if the goals of the program are being met, including but not limited to the goals of increasing access to renewable power and ensuring non-beneficiary ratepayer indifference.  Unless the commission determines that the program goals are not being met per the agreed upon goals and timetable, the commission shall authorize additional capacity to be made available under this program in keeping with the stated legislative intent.

     If the commission determines that one or more of the goals are not being met, the commission shall revise the program prior to authorizing additional capacity.  After the commission has revised the program, the commission may authorize additional capacity to be released.

     (h)  Prior to completion of the pilot program, the commission may evaluate the program at any time, either on its own motion or upon motion by an interested party, and may modify or adopt any rules it determines to be necessary or convenient to ensure that program goals can be met.

     §269-    Program management.  (a)  The tariff applicable to a participant shall be identical, with respect to rate structure, all retail rate components, and any monthly charges, to the charges that the participant would be assigned if the participant did not receive a bill credit.  Participants shall not be assessed standby charges on the shared renewable energy facility or the kilowatt-hour generation of a shared renewable energy facility.

     (b)  Prior to the sale or resale of an interest in a shared renewable energy facility, the participant organization or the participant, or both, shall provide a disclosure to the potential participant that, at a minimum, includes all of the following:

     (1)  A good faith estimate of the annual kilowatt-hours to be delivered by the shared renewable energy facility based on the size of the interest;

     (2)  A plain language explanation of the terms under which the bill credits will be calculated;

     (3)  A plain language explanation of the contract provisions regulating the disposition or transfer of the interest; and

     (4)  A plain language explanation of the costs and benefits to the potential participant based on the potential participant's current usage and applicable tariff for the term of the proposed contract.

     (c)  The participant organization may change, add, or remove a benefiting account upon providing the electrical corporation with a minimum of thirty days' notice, and may not do so more than once per month.  If the owner of a benefiting account transfers service to a new address or benefiting account, the electrical corporation shall transfer any credit remaining from the previous account to the new account.

     (d)  A participant organization shall be responsible for providing to the electrical corporation, on a monthly basis, a statement of the kilowatt-hours allocated to each participant to be used to determine the bill credit to each benefiting account.  If there has been no change in the allocations from the previous submission, the participant organization is not required to submit a new statement.  An electrical corporation may rely on the statement of kilowatt-hours allocated to each participant, as provided by the participant organization, in implementing the requirements of this chapter.

     (e)  If required by the electrical corporation, the participant organization shall provide real-time meter data to the electrical corporation and shall make the data available to a participant upon request.  A participant organization shall be responsible for all costs of metering and shall retain production data for a period of thirty-six months.

     (f)  A participant organization shall provide to the electrical corporation information on the identity of the benefiting accounts that will receive a bill credit pursuant to this section no less than thirty days prior to the billing cycle for which the participant's account will receive a bill credit.

     (g)  A participant organization shall provide no less than one hundred twenty days' notice to the electrical corporation and the commission prior to the date the shared renewable energy facility becomes operational and shall execute all necessary interconnection agreements, participation, and surplus sale agreements with the electrical corporation and the independent system operator on a schedule required by those entities.

     (h)  Unless the electrical corporation will be registering renewable energy credits on behalf of the participant, the participant organization shall establish an account and register the shared renewable energy facility with the western renewable energy generation information system or its successor.

     (i)  The participant organization's interconnection process and cost allocation for facilities built under this section shall be determined by applicable rules for interconnection established by the commission.  The facility owner shall be responsible for normal, applicable grid use and management fees, imbalance charges, or other costs allocated by the transmission or distribution system operator.

     (j)  An electrical corporation shall ensure that requests for establishment of bill credits and changes to benefiting accounts are processed no more than thirty days from the date it receives the request.  An electrical corporation shall cooperate fully with shared renewable energy facilities to implement this chapter.  The commission shall not regulate the prices paid for an interest in a shared renewable energy facility, but may enforce the required disclosures, and may establish rules applicable to participant organizations to ensure consumer protection.  Any interested person or corporation may file a complaint with the commission contending that a participant organization or electrical corporation is not complying with any requirement of this chapter and seek an order of the commission to enforce the requirements of this chapter and take necessary actions to ensure consumer protection and compliance with the requirements of this chapter.

     (k)  The electrical corporation may petition the commission to incorporate in its bill those charges by the participant organization to participants; provided that the electrical corporation recovers all incremental costs of providing that service; provided further that the participant organization elects to use this service.  Unless the electrical corporation elects to provide the service of incorporating in its bill those charges by the participant organization to participants, the following process shall be used when billing and crediting a benefiting account:

     (1)  An electrical corporation shall bill a benefiting account for all electricity usage, and for each applicable bill component.  Participants shall not be subject to any departing load charge;

     (2)  An electrical corporation shall subtract the bill credit applicable to the benefiting account.  The electrical corporation shall ensure that the participant receives the full bill credit to which the participant is entitled;

     (3)  If the total otherwise applicable energy component of the bill exceeds the bill credit at the end of each billing cycle, the benefiting account shall be billed for the difference; or

     (4)  If the bill credit exceeds the amount billed to the account at the end of each billing cycle, the difference shall be carried forward as a dollar credit to the next billing cycle.  Any earned credit shall roll over to the subsequent billing period and shall continue to roll over until used or until the annual anniversary date of the participant's initial bill credit, whichever occurs first.  On the annual anniversary date of the participant's initial bill credit, any remaining bill credit earned shall cease to roll over.

     On or before July 1, 2015, the commission shall require each electrical corporation to file with the commission, for its approval, any revisions to its tariffs, rates, and rate design as are necessary to ensure an equitable allocation to all customers, consistent with the commission's evaluation.

     The commission shall ensure full and timely recovery of all reasonable costs incurred by an electrical corporation to implement the program, including reasonable expenses for changes to their billing system and handling of collections, and shall determine the appropriate method of allocating those costs."

     SECTION 3.  New statutory material is underscored.

     SECTION 4.  This Act shall take effect upon its approval.












Report Title:

Renewable Energy; Public Utilities; Virtual Net Metering



Establishes a virtual net metering pilot program for renewable energy projects to be proportionally allocated between utilities.  Provides the opportunity for the commission to revise the bill credit mechanism for renewable energy credits.




The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.